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Though a month ago TSLA stock was approaching $1000, today it is trading much lover. Its current price is below $500 in the premarket.
Most of the tech stocks rose Friday together with the rest of the market. However, Tesla Inc (NASDAQ: TSLA) again decided to swim against the stream so it ended the week in the red after hours after President Donald Trump declared a national emergency over the coronavirus pandemic. Tesla shares opened on Friday at $595 plunged to $502 at their lowest point in trading. TSLA closed at $546.62. Even though on Monday the Federal Reserve announced another emergency rate cut over the weekend but failed to calm markets that have been in panic mode in recent weeks over the outbreak, this didn’t help the market. Tesla (TSLA) stock is trading 15.49% lower in the premarket today.
U.S. President Donald Trump declared a national emergency last week, while a number of European countries introduced lockdowns to tackle the growing pandemic. With this declaration, he freed up tens of billions in financial resources to help people and businesses affected by the Covid-19 outbreak. The announcement helped stocks see their biggest rally since 2008 but only for a short period of time.
TSLA Stock Running Against the Wind
However, it is interesting to see Tesla stocks running against the stream so much even though the company hasn’t issued any statements about employees directly affected by the Covid-19 pandemic. Tesla also hasn’t withdrawn or revised guidance in response to the novel coronavirus. Au contraire. The company has given the same sales goals to its North American team for the first quarter of 2020 as they were in the fourth quarter of 2019.
Be it as it may, Tesla sent dozens of U.S. workers home from Germany’s factory ahead of a ban that bars travelers from most European countries from entering the U.S. over the next 30 days.
Before that, the company said that its first electric pickup is boosting sales in North America even though it is not coming to market until the next year. It is also the first time Tesla buyers don’t have access to any federal tax credit for buying a car in the United States.
China Orders Tesla to Keep Chinese Production Compatible
Aside from the coronavirus, one thing also didn’t help Tesla. Last week, China’s industry ministry noted it asked Tesla Inc to keep its Chinese production compatible with the rest of the world since some Chinese buyers complained the company had put less advanced computer chips in cars made in China.
Some buyers said that the company puts HW2.5 chips in its Model 3 made in China while in its U.S. models, the HW3.0 chip, necessary for the Full Self-Driving mode, has been implanted. Tesla explained that this replacement was due to a lack of supply and that the company will replace those chips back.
According to analysts from Zacks Equity Research, Tesla holds a Zacks Rank #3 (Hold) in the Automotive – Domestic industry that ranks in the Bottom 34% of our Zacks Industry Rank. Over the last 30 days, the Zacks Consensus Estimate for the current quarter has moved from 29 cents per share to 76 cents.
“Given the way analysts feel about Tesla right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected,” said they.